Well, as if we need any reinforcement – new data released this week suggests an extra 133 apartment towers will need to be built on the Gold Coast in the next 20 years to meet the city’s growth projections.
We’re not talking three-storey walk-ups here. The data by Matt Gross of the National Property Research Company has made this calculation based on accommodation towers with an average of 230 apartments.
He has calculated that with population expected to rise a remarkable 76 per cent by 2036 (from 550,000 to 906,000), more than 156,000 new dwellings will be needed across the Gold Coast over this time period.
Of those new dwellings, almost 31,000 will be apartments, which will make up one fifth of all Gold Coast housing requirements.
Surfers Paradise itself will increase in population to 36,441 by 2036 – a 75 per cent rise which will see a requirement of 8200 dwellings alone.
“Those dwellings will be entering a market that is stabilising following the global financial crisis and which has seen few notable new apartment projects since 2007,” said Mr Gross in his report.
As a result, Mr Gross said the Surfers Paradise apartment market was potentially well positioned for property investors seeking capital gains with the market now in a similar pricing position to 2014 and price growth is restricted by lack of supply.
“The current price performance has continued to be restricted by a lack of new supply, which is set to change in the wake of record building approvals throughout the Gold Coast.
“With prices now stable at a 10-year low, considerable infrastructure upgrades recently completed or planned, and a 75 per cent increase in population projected for the region in the medium term, the Surfers Paradise apartment market provides a strong potential upside to investment.”
Mr Gross said analysis of median price growth during the past two apartment market cycles in Surfers Paradise revealed that each time the market bottomed out prices remained well above the previous low.
Above: Surfers Paradise v Sydney City median apartment prices
“Between the bottoming prices of 1991 and 2001 there was a 20 per cent rise in median price,” he said.
“Following this, the difference in the base price of 2001 and the current bottom in 2015 was an 89 per cent jump.
“The cycle trend favours long-term investments as every cycle has surpassed its previous peak.
“While the Surfers Paradise apartment has turned the corner, the recovery is in its infancy and current market conditions maintain strong upside potential should the cycle reach similar heights to the previous peak.”
Mr Gross said comparison of median apartment prices in Surfers Paradise and Sydney City highlighted the glitter strip’s value proposition, with the NSW capital’s median 124 per cent or $420,000 higher than Surfers’.
Above: Surfers Paradise apartment sales
“This demonstrates the distinct differences in market cycles with Sydney achieving peak median prices while Surfers Paradise’s sits at a 10-year low,” he said.
“Surfers Paradise appears to be at a more favourable point in the cycle for those looking to buy with arguably greater upside potential than Sydney.
“Investors can purchase at the bottom of the cycle rather than buying into Sydney where median sales prices remain at historical peaks.”